Title of the Bill
The America Saving for Personal Investment, Retirement, and Education Act of 2009 ("The ASPIRE Act of 2009")
To encourage savings, promote
financial literacy, and expand opportunities for young adults by establishing a
Lifetime Savings Account for every newborn child.
Lifetime Savings Accounts
Every child born after
December 31, 2009 will have a Lifetime Savings Account opened for them
automatically when their Social Security card is issued. Each account will be
endowed with a one-time $500 contribution, and children in households earning
below national median income will be eligible for a supplement contribution of
up to $500. Additional savings incentives include tax-free earnings, matched
savings for eligible families, and financial education.
The bill establishes the ASPIRE Fund within Treasury, which will be governed
by a Board of Directors similar in structure to the Board overseeing the Thrift
Savings Plan (TSP), the retirement program for federal employees. The Director
of the Fund will be appointed by the Board and shall have the same powers and
responsibilities as the Director of the TSP.
After an account has been
created, the Secretary of the Treasury shall automatically transfer to the Fund
a contribution of $500. All contribution amounts will be indexed for inflation.
A child will qualify for
a one-time supplemental contribution if their household income is below
the national median income. The maximum supplemental contribution will be $500.
The bonus amount will be evenly pro-rated so that a child receives the
full amount if their household income is at or below 75% of the national median
Adjusted Gross Income (AGI) and a lesser amount as the household income
approaches 100% of the national median AGI.
Eligible account holders can
receive a one-to-one match on private contributions to their accounts on an
annual basis until the accountholder reaches the age of 18. The bill allows for
accountholders with household incomes up to 75% of the national median AGI to
receive a dollar-for-dollar match on private contributions up to $500 and
phases out this match for accountholders with household incomes between 75% and
100% of national median AGI.
contributions can be made to each account each year until the accountholder
reaches the age of 18. The bill caps these contributions at $2,000.
Contributions will be after-tax and can come from any source. After
accountholders turn 18, contributions will be allowed according to Roth IRA
of the ASPIRE Fund
A range of investment options will be provided similar
to those offered by the Thrift Savings Plan, including a government securities
fund, a fixed income investment fund, a common stock fund, and other funds that
may be created by the Board.
Parents and legal guardians will serve as account
custodians and make investment decisions until the accountholder reaches the
age of 18. The account custodian shall elect how money in the Lifetime Savings
Account is invested. If no election is made, a life cycle investment option
will be specified as a default.
from Lifetime Savings Accounts
No withdrawals can be made
until the accountholder reaches the age of 18. Between the ages of 18 and 25 the
only allowed use of the funds will be for post-secondary education with
distributions being made directly to post-secondary education providers. After reaching
the age of 25, homeownership and retirement security will be the additional allowed
Rollouts and Minimum Balances
Accountholders have the choice to keep their accounts within the Fund or rollout a portion of their account to another Lifetime Savings Account provider. These providers may offer different investment options than accounts held in the Fund. This rollout may occur at
anytime after the initial account has been opened. However, to maintain the
account as a savings platform for retirement security and life-long asset
building, a minimum balance equal to the automatic contribution (initially
$500) is required in the accounts held by the ASPIRE Fund at all times until
of Lifetime Savings Accounts
Lifetime Savings Accounts
will be treated in the same manner as Roth IRA accounts. Qualified
distributions from these accounts will be tax-exempt and not included in gross
income. Non-qualified distributions will be taxed and subject to the Roth IRAs 10%
penalty on earnings and there will be a 100% tax on government contributions. Accountholders
can access their private contributions without penalty after age 18. Government
contributions will not be included in federal income tax calculations.
Account assets will not be considered in determining
eligibility for any Federally-funded benefit.
The bill explicitly calls for the development of
programs to promote financial literacy among persons who contribute to and
benefit from these children's savings accounts.